On 6 July 2016 the IMF released a staff report following consultations with Italy under Article IV of the IMF’s articles of agreement.
Italy’s economy is recovering from a deep recession and growth was 0.8% in 2015 with continued expansion in the first quarter of 2016. Growth is expected to be around 1% in 2016 and to remain around 1% in 2017. Labor market conditions have gradually improved and non-performing loans have stabilized at an estimated 18% of total loans. However productivity and investment remain low and public debt is around 133% of GDP, a level that restricts the fiscal space to respond to economic shocks.
Owing to high youth unemployment and low female participation in the labor force the IMF report calls for the implementation of active labor market policies. The IMF report calls for ambitious product and service market reforms including measures to strengthen the Annual Competition Law and implementation of public administration reforms to lower the cost of doing business and improve the investment climate. The IMF recommends further pro-growth reforms with less distortive taxation, including broadening the tax base and introducing a modern real estate tax.
